Staff reporter

The company had disappointed with its March quarter results as it processed lower-grade ore during the transition from openpit to underground at its Renard mine in Quebec.

It had then reduced 2018 production and sales guidance in May, to 1.35-1.4 million carats and 1.2-1.25Mct respectively.

On Friday, Stornoway said its new ore sorting plant was now fully operational and its transition to underground was "essentially complete" - albeit with a slower than expected underground ramp-up because of lengthening lead times on mobile mining equipment.

The company produced 223,351ct at an average grade of 40ct per hundred tonnes, compared with 285,851ct at 51ct/ht in the March quarter.

It sold 201,283ct in two tenders for gross proceeds of C$28.6 million (US$21.8 million) at an average price of US$109/ct.

It also sold a further 41,979ct of small diamond "incidentals" in an out-of-tender contract sale for $1 million (US$0.76 million) at an average price of US$18.50/ct.

Processing rates had averaged 6,460t per day in the June quarter compared to an annual plan of 7,000t/d.

President and CEO Matt Manson said the June results reflected the transition and the introduction of ore-waste sorting.

He said initial sorting results were encouraging and with the volume and quality of waste being rejected, Stornoway saw the potential for increasing processing beyond the plant's nameplate capacity.

"The second half of the year is expected to see lower capital spending, higher processing rates and higher grades and carat recoveries," he said.

He said the rough diamond market was continuing to strengthen, the company had finished its principal construction capital spend at Renard and was speaking with lenders to modify debt to better suit its working capital requirements.

The company had $31.6 million (US$24.1 million) in cash and equivalents at the end of June.

Stornoway shares rose 12.5% on the news on Friday to C49.5c. It had hit a 52-week low last Tuesday while Renard was temporarily suspended due to an encroaching forest fire.